Is Leasehold Extension An Option For You?

Is Leasehold Extension An Option For You?

This article explores who can and cannot apply for a leasehold extension in England & Wales. Many leaseholders are completely unaware of their rights to extend and considering there are over 3 million leasehold flats in the UK ' this could be a large proportion of people.The main statutory basis for extending leases is the Leasehold Reform Housing and Urban Development Act 1993, as amended. Under this Act, flat owners on a long lease are entitled to a leasehold extension of 90 years, in addition to the remainder of their existing term. This extension is granted at a peppercorn rent, meaning, in effect, that ground rents are no longer payable to the landlord. Owners of leasehold houses are entitled to apply for a lease extension under the Leasehold Reform Act 1967, as amended.Although this is a general legal right, there are exceptions. To begin with, you must have owned your lease for a minimum of 2 years, however you need not have resided in the property for that time. Secondly, the legal right to extend is granted to owners of properties on a long lease, that is, a lease with an original term of more than 21 years. For home owners there is another restriction which dictates that an extension cannot have take place before - current legislation only allows for house leases to be extended just one time.As well as these statutory exceptions, other exceptions may apply to individual properties on a case by case basis. An example of this are properties which are leased through the Crown or a Charitable Trust, they may not be eligible for a lease extension. Once you've established that you're eligible to apply for an extension, the next question to ask is why you should. The most tangible and pressing reason is financial. As the length of the lease slowly but surely winds down, so too does the value and saleability of your property. Short lease properties are notoriously unpopular with buyers and mortgage companies, and are very difficult to sell, unless you're lucky enough to live in a really desirable area. Getting a lease extension can also cost a lot more if your term falls below 80 years. At this point, you become liable for the "marriage value", a premium that's paid to the landlord in addition to the compensation for their diminished interest in the property. This is becoming more and more of an issue, as many properties were leased for 99 year terms in the 1970s and 1980s - these are now dipping below the 80 year cut-off point.The right to an extension of your lease is often a safe assumption, however it can never be a guarantee. If you do own a leasehold property, it is crucial that you seek advice from an experienced leasehold solicitor. To do otherwise might prove to be a very expensive oversight.

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